FY 2016 Results PresentationServcorp Limited
Wednesday 17 August 2016
1Presented by: Mr Alf Moufarrige, Chief Executive Officer
Mr Anton Clowes, Chief Financial Officer
Disclaimer
2
Important Information
Servcorp Limited (ABN 97 089 222 506) (“Servcorp”) is the parent entity of the Servcorp Group and is responsible for all information contained in this presentation.
Not an offer nor investment advice
This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives,
financial situation and particular needs of the investor. Before making an investment in Servcorp, the investor or prospective investor should consider whether such an
investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary. It does not contain
all the information necessary to fully evaluate any transaction or investment and, as such, no reliance should be placed on its contents. Any investment decision should be
made based solely upon appropriate due diligence and, if applicable, upon receipt and careful review of relevant offering documents. Recipients of this presentation
should neither treat nor rely on its contents as advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers.
Capital returns not guaranteed
Investment is subject to significant risks of loss of income and capital. To the maximum extent permitted by law, none of Servcorp, its directors, employees or agents,
accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability
arising from fault or negligence on the part of Servcorp or its directors, employees or agents. Information, including forecast financial information, in this presentation
should not be considered as a recommendation in relation to holding purchasing or selling, securities or other instruments in Servcorp Group.
Forecasts and forward-looking statements
Due care and attention has been used in the preparation of forecast information and forward-looking statements made in this presentation. However, actual results may
vary from forecasts and any variation may be materially positive or negative. Forecasts by their very nature, are subject to uncertainty and contingencies many of which
are outside the control of Servcorp Group. Past performance is not a reliable indication of future performance.
Dividend Guidance
Servcorp’s dividend guidance and related statements in this presentation are subject to Servcorp’s forecast assumptions being met.
Policies
This presentation has been prepared using policies adopted by the directors of Servcorp and, unless stated otherwise, these policies have been consistently applied to all
periods presented in this presentation. Parts of this presentation have therefore been prepared on a different basis to the Financial Report of Servcorp. Certain information
contained within this presentation does not, and cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of
Servcorp Group as in the Financial Report. This presentation should be read in conjunction with the Financial Report of Servcorp Group, which can be found on the
Servcorp website at www.servcorp.com.au
© Servcorp Group
NPBT growth of 19% exceeded full year guidance Stable cashflows generated from operations:
Continued to expand organically Capex additions of $27.6m Dividends paid of $21.7m Unencumbered cash balance maintained year on
year Like for Like occupancy 77% (2015: 79%)
notwithstanding > 7% new office stock added (net) in FY 16
All floors occupancy 75% (2015: 76%) Healthy cash reserves uniquely positions us
to take advantage of opportunities
3
Solid performanceOverview
FY 16 Result
4
NPAT A$39.7m, 20%FY 16A$m
FY 15A$m
FY 16 v FY 15
Revenue 328.6 277.4 19%Total operating expenses (279.8) (236.2) 19%Net profit before tax 48.8 41.2 19%Income tax expense (9.1) (8.1)Net profit after tax 39.7 33.1 20%
Like for Like NPBT 56.8 41.6 37%
Net tangible assets per share $2.50 $2.31 8%Earnings per share $0.40 $0.34 20%
ConstantFX
10% 11%16%
FY16 FrankingFinal dividend per share A$0.11 50%Total dividend per share A$0.22 50%
5
Statutory PositionBalance sheet and Cash flowBalance Sheet FY 16
A$mFY 15A$m
Cash 95.8 97.8
Trade receivables 40.3 39.2
PP&E 132.0 125.8
Goodwill 14.8 14.8
Deferred tax asset 35.2 30.1
Other assets 74.4 63.5
Total assets 392.5 371.2
Trade payables 77.0 74.4
Provisions 7.4 6.4
Deferred tax liabilities 1.2 1.4
Other liabilities 45.9 47.1
Total liabilities 131.5 129.3
Net assets 261.0 241.9
Cash Flow FY 16A$m
FY 15A$m
Opening cash 1 July 97.8 92.5
Net operating cash inflows 60.6 59.9
Net investing cash outflows (37.1) (42.6)
Net financing cash outflows (27.7) (15.9)
Foreign exchange movements 2.2 3.9
Closing cash 30 June 95.8 97.8
Growth %
8%
Sustained revenue & profit growth
Best-in-world product and organic expansion primary drivers of double digit profit growth for the last 5 years
Forecast NPBT growth for FY 17 of approximately 15%
6
Performance
$200.8 $208.0$242.2
$277.4
$328.6
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
FY 12 FY 13 FY 14 FY 15 FY 16
A$m
Revenue
$18.3
$27.6
$34.3
$41.2
$48.8
$56.0
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
FY 12 FY 13 FY 14 FY 15 FY 16 ForecastFY 17
A$m
Profit before tax
Healthy cashflow & liquidity
Organic growth funded through cash generated from operations, 45% of cash generated in FY 16 funded global floor openings
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Positioning
$97.8 $95.9
$1.5
$60.6
$158.4
($27.4)
($7.2) ($2.4)
($21.7)
($6.0) $2.2 $3.8
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
Cash 1 July2015
CashGenerated
fromOperations
(After Tax Paid)
Cash beforeInvesting &Financing
Net PPEAdditions
Net LeaseDeposit
Payments
Net SecurityInvestment
Dividends Paid OtherFinancing
FX Cash 30 June2016
A$m
Cashflow & liquidity
InvestingActivities$37.0 m
Financing$27.7m
Total Unencumbered cash $99.7m
Total Unencumbered cash $99.3m
8
Servcorp continues to expand global footprintThe Servcorp Footprint
Increased office capacity by 381 (net) offices Growing office stock by > 7%
Added new landmark locations: World Trade Center, Abu Dhabi CapitaGreen, Singapore Diplomatic Tower, Bahrain
We have added 35 (net) new floors to our footprint since June 2011
FY 17 new locations include: Tri-Seven, Tokyo (opened in July 2016) IFC, Jakarta (scheduled opening October 2016) Barangaroo, Sydney (scheduled opening November 2016) River Point, Chicago (scheduled opening January 2017)
36 39 43 45 46 48
31 34 33 35 35 3625
27 31 31 384321
2122 22
2322
33
3 33
2
0
20
40
60
80
100
120
140
160
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
No
of fl
oors
Servcorp Floor footprint
ANZSEA North Asia EME USA India
116124
132136 145
151
Segment Performance
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Global overview
Segment Revenue Revenue Growth Profit / (Loss) Margin A$m % A$m %
FY 16 FY 15 Actual Constant FX FY 16 FY 15 FY 16 FY 15
Australia, New Zealand and South East Asia 87.1 81.3 7% 12.2 8.8 14% 11%
North Asia 105.0 89.4 17% 20.8 17.6 20% 20%Europe & Middle East 93.4 73.4 27% 18.5 15.5 20% 21%USA 35.1 24.8 42% (3.8) (5.0) (11%) (20%)Others 0.8 0.9 0.2 0.2
Total 321.4 269.8 19% 10% 47.9 37.1 15% 14%
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Like for Like NPBT in ANZSEA improved by 27%
Overall Australia profitability improved by 16% Significant improvement in Sydney market
profitability and sales Perth continues to be impacted by office stock
over-supply and lack of demand Australia and New Zealand occupancy is healthy
at more than 80% Malaysia and Singapore on a Like for Like basis
were profitable but underperformed in FY 16 ILHAM Tower, Kuala Lumpur and CapitaGreen,
Singapore opened in FY 16 and are expected to be profitable in FY 17
FY 17 new locations in this region include: Barangaroo, Sydney IFC, Jakarta
Operating Summary by SegmentANZ and South East Asia (ANZSEA)
$81.3 $87.1
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
FY 15 FY 16
A$m
ANZ & South East Asia Revenue
$8.8
$12.2
$0.0$2.0$4.0$6.0$8.0
$10.0$12.0$14.0
FY 15 FY 16
A$m
ANZ & South East Asia NPBT
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North AsiaOperating Summary by Segment (cont’d)
North Asia produced a solid FY 16 result Like for Like NPBT increased by 25% Regional revenue increased 17% There was only one new opening in
North Asia this year being Osaka Hilton
China was profitable but missed its target this year and continues to be a focus area for Management
Subsequent to year end Tokyo opened a new floor in the Tri-Seven Building
$89.4$105.0
$0.0$20.0$40.0$60.0$80.0
$100.0$120.0
FY 15 FY 16
$Am
North Asia Revenue
$17.6$20.8
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
FY 15 FY 16
$Am
North Asia NPBT
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Operating Summary by Segment (cont’d)
EME produced a solid result Like for Like NPBT up 58%
With the exception of France all markets performed to expectations
During FY 16 we opened new locations in: Abu Dhabi Bahrain
Europe and Middle East (EME)
$73.4
$93.4
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
FY 15 FY 16
A$m
Europe & Middle East Revenue
$15.5$18.5
$0.0
$5.0
$10.0
$15.0
$20.0
FY 15 FY 16
A$m
Europe & Middle East NPBT
13
USAOperating Summary by Segment (cont’d)
The USA underperformed and did not meet its target this year
Like for Like Net Loss Before Tax for the USA reduced by 66% during FY 16
USA EBITDA improved, up to $3.8m on FY 15 (FY 15: $80k)
Overall USA occupancy marginally below global average
Management has a heightened focus on the USA
New mega-floor opening in Chicago in January 2017
$24.8
$35.1
$0.0$5.0
$10.0$15.0$20.0$25.0$30.0$35.0$40.0
FY 15 FY 16
A$m
USA Revenue
-$5.0
-$3.8
-$6.0
-$5.0
-$4.0
-$3.0
-$2.0
-$1.0
$0.0
FY 15 FY 16A$
m
USA NPBT
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FY16 dividend paid & declaredDividend
Final dividend payable of 11.00 cps, 50% franked
Total dividends payable of 22.00 cps, 50% franked
FY 17 forecast Dividends of 22.00 cps (11.0 cents in each half) are anticipated to be paid for
FY 17 FY 17 franking levels are uncertain, but are expected to be similar to current
franking levels
Future dividends are subject to currencies remaining constant, global financial markets remainingstable and no unforeseen circumstances
7.5 7.511.0 11.0 11.0 11.0
7.5 7.5
8.011.0 11.0 11.0
0.0
5.0
10.0
15.0
20.0
25.0
FY 12 FY 13 FY 14 FY 15 FY 16 ForecastFY 17
cps
Dividends paid (cents per share)
Interim Final
15
FY 17 guidanceOutlook
New centres opening in FY 17 should have a similar impact on profits as floors that opened in FY 16
We aim to grow capacity by up to 7% in FY 17
A. Subject to currencies remaining constant, global financial markets remaining stable and no unforeseen circumstances.
Forecast GuidanceA FY 17 FA$m
FY 16 AA$m
Growth %
Revenue 356.0 328.6 8%Net profit before tax 56.0 48.8 15%
QUESTIONS&
ANSWERS
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